Tesco saw a 2.4% decline in UK like-for-like sales excluding fuel over the festive period, which the supermarket blamed on further weakness in the UK grocery market.

GENERAL MERCHANDISE

Tesco's UK like-for-like sales drop 2.4% at Christmas

9 January 2014 | by The Retail Bulletin

Tesco saw a 2.4% decline in UK like-for-like sales excluding fuel over the festive period, which the supermarket blamed on further weakness in the UK grocery market.

In the six weeks to 4 January 2014, group sales fell by 1.6% including fuel with like-for-like sales dropping 2.8% excluding fuel.

International sales also declined in the six week period, falling 3.6% on a like-for-like basis excluding fuel.

Tesco said the poor performance in the UK was driven primarily by a weaker grocery market, and also reflected the impact of a tougher comparative with the same period last year. In addition, trading was affected by the supermarket’s decision to reduce its new store opening programme and by ongoing work to improve its general merchandise offer, which is holding back top-line performance in the short term.

The supermarket took over £1 billion in sales in the five days before Christmas, which included its biggest trading day, while UK online sales grew by 14% in the six week period to £450 million. Tesco also processed over 3 million online grocery orders, which climbed 11% in the six weeks. Online general merchandise orders rose by 25% to 1.5 million with over 70% of orders collected in-store.

Tesco chief executive Philip Clarke said: "We continued to invest in the most compelling offer for the tens of millions of customers who chose to shop with us this Christmas, but further weakness in the grocery market as a whole continued to impact our performance in the UK.

“Our ongoing work to Build a Better Tesco in the UK is also driving continued improvements for customers, although the effects are being masked in the short term by the strategic changes we have made to improve the long-term sustainability of our business – the transformation of our general merchandise business and the significant reduction in our new store opening programme.

“As expected, this Christmas saw a further consumer shift towards multi-channel retailing, and Tesco continues to play a leading role. The increasing focus we have placed in recent years on extending our lead in online grocery and on rolling out our Express format to over 1,600 stores in the UK alone has positioned us well to meet customers' changing needs.

“Our overseas performance has improved since the third quarter, driven by an improving trend in Europe. This is despite continuing external challenges, including the recent political disruption in Thailand."

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